New Construction Loan For Short Term Rental

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New Construction Loan For Short Term Rental

Member since 2025 · 23 posts · 7 votes

To clarify we are sellers not mortgage broker. We have a potential buyer of a lot in St Augustine, FL who would like to build a new single family short term rental. Property will be held in LLC. Looking for best options. Good credit. Good cash flow and equity upon completion. Do 80/90% of land 100% of construction loans exist? Or what programs can anyone suggest that would be best for this scenario. Thank you in advance for reading!

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Dominic Mazzarella

Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes

Quote from @Chris Anthony:

Yes, there are lenders that will do 80-90% of land and 100% of construction, but it's usually through specialized construction loan programs or private lenders. Banks and credit unions might have lower-cost options, but they'll likely require more equity. You might also want to look into DSCR loans since it’s an STR. Have you considered reaching out to local lenders or brokers who specialize in new construction? They might have access to portfolio loan programs that fit your buyer’s situation.

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Dominic Mazzarella
Investor · Hendersonville, NC · Member since 2016 · 498 posts · 285 votes
1y
Quote from @Chris Anthony:

To clarify we are sellers not mortgage broker. We have a potential buyer of a lot in St Augustine, FL who would like to build a new single family short term rental. Property will be held in LLC. Looking for best options. Good credit. Good cash flow and equity upon completion. Do 80/90% of land 100% of construction loans exist? Or what programs can anyone suggest that would be best for this scenario. Thank you in advance for reading!

Yes, there are lenders that will do 80-90% of land and 100% of construction, but it's usually through specialized construction loan programs or private lenders. Banks and credit unions might have lower-cost options, but they'll likely require more equity. You might also want to look into DSCR loans since it’s an STR. Have you considered reaching out to local lenders or brokers who specialize in new construction? They might have access to portfolio loan programs that fit your buyer’s situation.
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Zach Edelman
Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
1y
Yes. Maybe not at these exact terms but similar for sure. For example, we offer up to 85% LTC on GUC loans, with us funding 100% of rehab. The way the numbers shake out, it probably is close to 75/100 or 80/100.
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Ko KashiwagiPro Member
Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
1y
What's their experience looking like? Ground up loans are very experienced based. If they have 3-5+ experience those high leverages are typically available.
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Chris Anthony
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Member since 2025 · 23 posts · 7 votes
1y
Thank you for the replies. They are not experienced real estate investors, they are retired and looking to create additional income. They will be using a builder to build the property and a professional property manager to manage it.

The property is located on St Augustine Beach and other STRs have high occupancy rates, solid ADRs and are very profitable when managed correctly. Putting 20 to 30% LTC wouldn't be a problem. I would imagine the program would have to allow the projected rental income from the property to help them qualify from an income standpoint? What could they expect as far as rates/ points, etc...?
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Brandon Croucier
Lender · Nashville, TN · Member since 2024 · 700 posts · 284 votes
1y
Quote from @Chris Anthony:

Thank you for the replies. They are not experienced real estate investors, they are retired and looking to create additional income. They will be using a builder to build the property and a professional property manager to manage it.

The property is located on St Augustine Beach and other STRs have high occupancy rates, solid ADRs and are very profitable when managed correctly. Putting 20 to 30% LTC wouldn't be a problem. I would imagine the program would have to allow the projected rental income from the property to help them qualify from an income standpoint? What could they expect as far as rates/ points, etc...?

80% LTC is standard on ground-up construction, if they are using an experienced builder, have decent credit & the after-build value is sufficient, it should be a fairly straight-forward loan.
The main problem I see with non-experienced builders trying to build is lack of funds, they will need 20% of project cost + Closing Costs + 6 months reserves.
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Erik EstradaBusiness Member
Lender · Member since 2022 · 6k+ posts · 1k+ votes
1y
Quote from @Chris Anthony:

Thank you for the replies. They are not experienced real estate investors, they are retired and looking to create additional income. They will be using a builder to build the property and a professional property manager to manage it.

The property is located on St Augustine Beach and other STRs have high occupancy rates, solid ADRs and are very profitable when managed correctly. Putting 20 to 30% LTC wouldn't be a problem. I would imagine the program would have to allow the projected rental income from the property to help them qualify from an income standpoint? What could they expect as far as rates/ points, etc...?

Hi Chris,
Most Ground-Up lenders are capped at 85% LTC. If this is a first timer with no prior experience, you might be looking at 70-75% LTC. Depending on ARV, you might be able to finance 100% of the construction so long as you are not over 65-70% of the ARV. I would suggest the client to find another partner with experience or have the builder/GC PG for favorable terms.
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